Powell: Politicizing Fed Will 'Erode Its Credibility'
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- Jerome Powell, in one of his first major speeches since stepping down as Fed Chair earlier this month, warned that politicizing the Federal Reserve will erode its credibility, calling independence "a priceless asset"
- Accepting the 2026 JFK Profile in Courage Award in Boston, Powell said if any administration can remove Fed officials over policy differences, the public would "lose faith" in the central bank, and described the Fed as "undergoing a stress test"
- President Donald Trump spent the past year attacking Powell, seeking lower rates and threatening to fire him; Powell also faced a criminal investigation over Fed headquarters cost overruns that he and others called politically motivated
- Trump also sought to oust Fed governor Lisa Cook; the Supreme Court is expected to rule on the legality of that move soon
- Despite Trump's hand-picked successor Kevin Warsh supporting rate cuts, the CME FedWatch tool gives 99% odds the Fed holds rates steady at its June meeting, with many experts expecting the next move to be a rate hike before year-end
Why it matters: Powell's defense of Fed independence lands as the Supreme Court prepares to rule on Trump's attempt to oust Governor Lisa Cook — a verdict that could determine whether presidents can remove Fed officials over policy. With 99% odds the Fed holds rates in June and many expecting a hike by year-end, the credibility Powell invokes now directly conditions market expectations for monetary policy.
